I’ve previously shared stories about insurance companies that engage in unfair claims settlement practices in order to avoid paying out on legitimate claims. The bottom line for insurance companies is money. The more claims the insurance company denies, the greater the profit. This is why several insurance companies have developed a reputation for systematically denying claims. Incredibly, some of these companies are proud of their reputation.
Recently, there was an article in the Philadelphia Inquirer which brought to light the egregious conduct of an insurance company in a battle which lasted 20 years. The accident occurred on September 4, 1996, when the Plaintiff, Sherri Berg, who was driving a brand new jeep, was struck by a large Suburban. While the Plaintiff was fortunately not injured, her jeep sustained very significant damage. She reported the accident to her insurance company, Nationwide, and took the vehicle to a body shop for a repair estimate. Although she did not know it at the time, the body shop declared the vehicle a total loss. Additionally, the frame was severely bent, which meant it was not safe to put back on the road. Nationwide balked at paying out the full value of the vehicle, and instead got a “second opinion” which called for the jeep to be repaired instead of being replaced. A mechanic from the shop was so disgusted by the insurance companies actions, and worried that the jeep was not safe to drive, that he felt compelled to contact the Bergs to let them know what was going on.
The Bergs filed a lawsuit in 1998 against Nationwide. Instead of Nationwide honoring the property damage claim, which was valued at approximately $25,000.00, Nationwide spent more than $3 million defending itself in the 16-year legal fight with the Bergs. During the lawsuit, the Plaintiff’s attorneys found internal documents which showed that Nationwide had a practice of fighting smaller claims tenaciously – even though such a strategy had been denounced by Pennsylvania courts as “unethical and unprofessional.” This is because they figured that most consumers would not spend the money to litigate these smaller cases, which would ultimately equate to more profit for the insurance company. The judge was so disgusted with Nationwide’s behavior, which included hiding photos of the vehicle, that he awarded $18 million in punitive damages in order to punish the insurance company.
Has an insurance company unfairly denied a claim that you recently filed? If so, please contact the experienced attorneys at Stark & Stark to discuss your situation.